Microsoft is a big company with lots of divisions, and people, and products. It makes everything from the operating system that powers most of the world's desktop computers, to cloud computing services, to laptops. It even makes a foldable phone.

Just last month it overtook Apple as the most valuable company on earth. That means that the company's CEO, Satya Nadella, has a big job. No CEO can possibly do it all on their own, which means that--at its core--the job is to find people who can help the company continue to innovate and build new products and services for its customers. 

In an interview with Harvard Business Review, Nadella was asked what he thinks is the most important factor when it comes to innovation. It is, no doubt, a complicated question. 

Coming up with new ideas is hard, and it's far too easy to become complacent. For a company like Microsoft, which is currently worth more than $2.5 trillion, it's an even bigger challenge. It would be tempting to fall back on the technology the company builds as the source of innovation, but that's not what Nadella says is most important. 

You might think that a leader of a company the size of Microsoft would look for talent, or creativity, or experience. And, I'm sure he does. It's just not the most important thing. For that, Nadella, only needed one word to describe where he thinks innovation comes from--empathy. 

Nadella went on to explain:

To me, what I have sort of come to realize, what is the most innate in all of us is that ability to be able to put ourselves in other people's shoes and see the world the way they see it. That's empathy. That's at the heart of design thinking. When we say innovation is all about meeting unmet, unarticulated, needs of the marketplace, it's ultimately the unmet and articulated needs of people, and organizations that are made up of people. And you need to have deep empathy.

So I would say the source of all innovation is what is the most humane quality that we all have, which is empathy.

Here's why I love that answer. First, I agree completely with his assessment that innovation is "all about meeting unmet, unarticulated needs of the marketplace." Probably most leaders would agree. That's the reason you start a business--you see a need that you could meet, so you develop a product or service to do just that.

But, here's where it gets interesting. It can be easy to start thinking about those customers--and their needs--in the abstract. Customers, however, are people. Businesses, as Nadella observes, "are made up of people." The needs you are meeting are the needs of real people, and to create innovative solutions to their problems, you have to first understand the people.

That's empathy--the ability to understand and share the feelings of other people. Having empathy means you can focus first on the people and their needs. It means taking the time and effort to understand them as individuals, not just as a cohort of "customers." 

It seems like empathy would be a given, but the fact that Nadella raises the issue is a reminder that too often it's an afterthought. We lose sight of the people in the midst of the product and the features. That's why it's up to leaders to reinforce the importance of focusing on what really matters--people. It's up to leaders to model and expect empathy.

Truly innovative companies are made up of people. Those people aren't just focused on spreadsheets and product design and software code--they're focused on people who use the products, or the software, or even the spreadsheets. They're focused on empathy Or, at least, they should be.